Celsius Creditors Accuses Wintermute for Engaging in Wash Trading
Wintermute, the popular crypto market marker, was accused by the Celsius creditors of assisting officials of the now-defunct lending platform in manipulating the trading volumes. The devastated Celsius creditors claimed that Wintermute engaged in “wash trading,” a deceptive approach used to manipulate the prices on the trading platform.
In a recent court filing, the Bloomberg reporters noted that the Celsius creditors amended their current lawsuit, alleging that the lending platform collaborated with officials from Wintermute to conduct wash trading. The submission was presented at the US District Court for the District of New Jersey on June 23.
How Did Wintermute Assist Celsius in Price Manipulation?
Based on the court report, wash trading falls under the market manipulation category, which lures customers to invest in assets purported to be trading at a higher volume than the actual market reading.
It was reported that the Wintermute official had made arrangements with the Celsius chief executive Alex Mashinsky and other top executives to orchestrate a wash trade to make measurable profits from the sale of unregistered tokens.
The creditors confessed that Wintermute and Celsius’ officials engaged in a ‘scienter’ a deceptive activity to manipulate the market prices. They argued that the two firms launched an unlawful scheme that mainly focused on inflating Celsius assets trading volume and market prices.
Reportedly the unknown scheme came to light following information portrayed by Celsius executives through publicly available internal dialogues. The creditors blamed Celsius and the Wintermute team for engaging in unlawful market-making from March 2021 to June 2022.
Following the creditor’s report, the market critics observed that the troubled lending platform lacked proactive measures to address improper market-making. The proposed measures were confirmed to be non-existent. At the same time, the other measures lacked a crucial element to monitor and control any reported cases involving wash trading.
Wintermute Alleged of Wash Trade
The news concerning price manipulation came days after the crypto lender was accused of acquiring some of the assets through an auction. Last month the Fahrenheit group was awarded the bid to purchase Celsius assets amounting to $2 billion. The Fahrenheit team comprises a consortium with multiple buyers, including Arrington Group and US Bitcoin Corp.
Reportedly in April, during the Bahamian crypto exchange court proceeding, it was observed that Celsius was in the top ten list of firms engaging in susceptible price manipulation. After the crypto lender filed for Chapter 11 of bankruptcy protection, the creditors witnessed suspicious trade trends on the platform.
A review of the Celsius bankruptcy proceedings revealed that the prosecutors are seeking additional information concerning 95 CEL transactions that have close links with wash trades involving FTX wallets and self-custody.
Elsewhere Arkham intelligence unit observed that Celsius transferred around $20 million to Wintermute wallet WETH. Before the Arkham report, a Twitter user @ Mikeburgersburg discovered that the insolvent lending platform had transferred measurable amounts to Wintermute.
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